Hundreds of workers are expected to be laid off when automaker Stellantis closes an assembly plant in northern Illinois early next year, citing the challenge of rising costs of producing electric vehicles.
The company, which employs about 1,350 workers at the Belvidere, Illinois plant, said the action would result in indefinite layoffs and it may not resume operations as it considers other options.
Stellantis said the industry “has been impacted by a multitude of factors such as the current COVID-19 pandemic and the global shortage of microchips, but the most significant challenge is the rising cost of electrifying the car market”.
The Belvidere plant, which produces the Jeep Cherokee SUV, will be idle from Feb. 28, 2023, Stellantis said. The Toluca, Mexico plant will now produce the vehicles.
Automaker Stellantis will halt operations at the Belvidere, Illinois plant, which employs 1,350 people and builds Jeep Cherokee SUVs, citing rising costs to produce electric vehicles
The company said the shutdown of the Belvidere, Illinois plant (pictured) will result in indefinite layoffs and it may not resume operations as it considers other options.
“This difficult but necessary action will result in indefinite layoffs, which are expected to exceed six months and may constitute loss of employment under the Worker Adjustment and Retraining Notification (WARN) Act. As a result, WARN notices have been issued for both hourly and salaried employees,” the company said.
“The company will make every effort to place laid-off indeterminate employees into open full-time positions as soon as they become available.”
Stellantis has announced that it will invest more than $31.6 billion through 2025 to electrify its vehicle lineup.
It also said it expects electric vehicles to account for 100% of its sales in Europe and 50% in the United States by 2030.
The White House had no immediate comment, but has repeatedly claimed electric vehicles would boost US auto jobs.
Tim Ferguson, shop president of United Auto Workers (UAW) Local 1268, which represents hourly workers at the Illinois plant, said in an interview that company documents show the Cherokee production is transferred to the plant in Toluca, Mexico.
“It’s a pretty hard pill to swallow that they’re going to ship your vehicle to Mexico,” Ferguson said.
“For me, there is no doubt,” he added. “Their plan is to close this factory.”
The Belvidere plant will be inactive from February 28, 2023, Stellantis said. Pictured is Stellantis CEO Carlos Tavares in October 2022
The company said the replacement for the Jeep Cherokee SUV, along with other vehicles on a new electrified platform, will be produced in Toluca, Mexico (pictured)
Stellantis was formed last year with the merger of Fiat Chrysler and French PSA Peugeot.
The administration of Governor JB Pritzker assembled a Department of Commerce and Economic Opportunity response team to help displaced workers find new jobs, Pritzker spokesman Jordan Abudeyyeh said.
She said the administration will work with local officials, community colleges and others to ensure appropriate recycling programs are available, and with Stellantis to find new uses for the Belvidere plant.
In 2016, Fiat Chrysler announced that it would invest $350 million in the plant to produce the Jeep Cherokee. Production of the Cherokee began there in 2017.
Stellantis said Friday the automaker was not commenting on the future of the “Cherokee nameplate.”
“This is an important vehicle in the lineup, and we remain committed to this mid-size SUV segment for the long term,” company spokesperson Jodi Tinson said in an email.
Stellantis, which also pointed to the coronavirus pandemic and the global shortage of microchips as challenges for the auto industry, said it was working to identify opportunities for repurposing the Belvidere facility.
A robot tightens the lug nuts of the wheel of the Fiat 500 at the assembly plant in Toluca (Mexico)
Robotic arms apply paint to a Dodge Journey in the paint shop at FCA Toluca’s assembly plant. The factory has been building vehicles since 1968
The “Conos” are iconic sculptures designed by well-known Mexican painter and sculptor Mathias Goeritz at FCA Toluca’s assembly plant. The plant manufactures the Jeep® Compass, Dodge Journey and Fiat 500
Sam Fiorani, head of production forecasting firm AutoForecast Solutions, said automakers will continue to take “money out of slow-selling pure ICE vehicles like the Jeep Cherokee.”
He also said the Cherokee replacement, along with other vehicles on a new electrified platform, will be produced in Toluca.
The company said it is also working to identify other opportunities to repurpose the Belvidere facility and has no additional details to share at this time.
UAW Vice President Cindy Estrada noted that Stellantis imports many vehicles into the United States and said “companies like Stellantis are receiving billions in government incentives to switch to clean energy.” It is an insult to all taxpayers not to reinvest this money in our communities.